The Relative Strength Index (RSI) is a momentum indicator that helps traders identify overbought and oversold market conditions. It ranges from 0 to 100, with two key levels:
✅ RSI < 30 → Oversold: The asset is potentially undervalued, indicating a buying opportunity.
🚨 RSI > 70 → Overbought: The asset is potentially overvalued, signaling a potential sell-off.
How to trade it?
- When RSI drops below 30 and then moves back up, it suggests a bullish reversal (see green arrows).
- When RSI goes above 70 and then turns down, it signals a potential downtrend (see red arrows).
How long should you hold your position?
A great tip is to stay in the trade until RSI approaches the opposite extreme. For example:
- If you enter when RSI is below 30, hold until it nears 60-70 for an optimal exit.
- If you sell when RSI is above 70, you can hold a short until it drops near 40-30.
In the chart, you can see how the RSI accurately predicted major turning points in the market!
⚠️ Pro Tip: RSI works best when combined with other indicators like volume or moving averages to confirm signals!
✅ RSI < 30 → Oversold: The asset is potentially undervalued, indicating a buying opportunity.
🚨 RSI > 70 → Overbought: The asset is potentially overvalued, signaling a potential sell-off.
How to trade it?
- When RSI drops below 30 and then moves back up, it suggests a bullish reversal (see green arrows).
- When RSI goes above 70 and then turns down, it signals a potential downtrend (see red arrows).
How long should you hold your position?
A great tip is to stay in the trade until RSI approaches the opposite extreme. For example:
- If you enter when RSI is below 30, hold until it nears 60-70 for an optimal exit.
- If you sell when RSI is above 70, you can hold a short until it drops near 40-30.
In the chart, you can see how the RSI accurately predicted major turning points in the market!
⚠️ Pro Tip: RSI works best when combined with other indicators like volume or moving averages to confirm signals!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.